I'm on a reporting trip in Angola, a place where the State Department advises travelers to "never touch anything that resembles a mine or unexploded ordnance." I have brought a guidebook. It says Angola is "not a holiday destination for beginners."
I am traveling with a team of GE executives led by John Krenicki, CEO of the company's energy unit. We've sat through a lecture on an especially virulent strain of malaria in the region. We've had two days of back-to-back meetings, visited a power station floating on a barge, and toured a liquefied natural gas plant on the banks of a tributary of the Congo River, downstream from Livingstone Falls, named for the explorer who died of dysentery. We'd had to leave behind two members of the team whose visas to Angola hadn't come through. And now we're in a chartered jet, homeward bound, getting ready for takeoff.
A crew member comes into the cabin with an announcement. The flight will be delayed. There are wild dogs on the runway.
I'm ready to jump into the Congo, but Krenicki (pronounced KRIN-icky) just pokes away at his BlackBerry. It's a long way from Crotonville, but he's used to doing business this way. In fact, Krenicki's energy division and its far-flung operations are becoming the main engine that drives GE (GE).
For most of the past decade it was GE's finance division, GE Capital, that famously held that distinction, at times providing more than half of the company's earnings. But during the financial crisis GE Capital floundered. Jeffrey Immelt, GE's CEO, vowed to shrink it and refocus on industrial businesses. Since the start of the recession, GE has shed its security operations, along with some assets in the finance division. GE spent $11 billion on acquisitions in Krenicki's business last year, including all of the $8 billion it gained selling part of its stake in NBCUniversal to Comcast.
Now, Krenicki says, "If I don't like where the GE share price is, I look in the mirror."
This year Krenicki's division, which manufactures things like gas turbines and solar panels, is expected to bring in about $45 billion in revenue, making it the biggest industrial unit in the company. Profits haven't grown year over year since the third quarter of 2010, hurt by the popping of a bubble in the wind turbine market. GE says the energy division's profits should start to rise again in the final period of 2011. Of the third quarter, when profits were down 9% year over year, Krenicki says, "We feel crappy, but we made $1.5 billion."
Krenicki, who is 49, has nearly doubled the unit's size since taking it over in 2005. Last year it had revenue of $37.5 billion, which would have made it No. 67 on the Fortune 500 list if it were a standalone company. He expects revenue to hit $60 billion by 2014 and $100 billion in a decade. Compare that with GE's total revenue of $152 billion in 2010, and you see the size of the bet. "This is a business that can absolutely move the needle in a major way," says J.P. Morgan analyst Stephen Tusa.
